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Rent Shifting and Rent Sharing: A Re-examination of the Strategic Industrial Policy Problem

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Author Info
K. C. Fung
Abstract

This paper reexamines the market structure problem in the strategic trade policy literature. It is shown that rent sharing between the home union and the home firms raises total home industry rents regardless of whether the international duopoly is Cournot or Bertrand. Furthermore, home welfare also rises with cooperation if the international industry consists of more than two firms, if the industry is faced with entry, and if there is domestic consumption. This paper shows that rent sharing can be a robust strategic industrial policy and can be interpreted as a solution to the market structure dilemma.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 28 (1995)
Issue (Month): 2 (May)
Pages: 450-62
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Handle: RePEc:cje:issued:v:28:y:1995:i:2:p:450-62

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  1. Subhayu Bandyopadhyay, Sudeshna C. Bandyopadhyay, 2001. "Efficient bargaining, welfare and strategic export policy," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 10(2), pages 133-149, June. [Downloadable!] (restricted)
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